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Part 1
A man buys a racehorse for
$20 comma 00020,000
and enters it in two races. He plans to sell the horse afterward, hoping to make a profit. If the horse wins both races, its value will jump to
$80 comma 00080,000.
If it wins one of the races, it will be worth
$50 comma 00050,000.
If it loses both races, it will be worth only
$15 comma 00015,000.
The man believes there is a
2525%
chance that the horse will win the first race and a
4040%
chance that it will win the second one. Assuming that the two races are independent events, find the man's expected profit.